Ryanair Warns Fuel Costs Threaten Fares

European budget airline Ryanair is considering temporary staff pay freezes and additional cost reductions as soaring fuel prices threaten to push airfares higher across the continent. The carrier announced on 2 November that second-quarter net profit had fallen 6% to €1.61 billion, despite carrying more passengers during the peak summer travel period.

Ryanair transported 64.5 million passengers during the three months ending September, an increase of 5%, while average fares declined 2%. Higher operating costs weakened profitability, particularly as the price of jet fuel not covered by existing hedging agreements doubled. For the first half of its financial year, profit after tax fell 15% to €2.15 billion, even as passenger traffic increased 6% to 125.8 million.

Chief executive Michael O'Leary warned that the airline's fuel bill could increase by approximately €2 billion in the financial year ending March 2028. Ryanair expects European short-haul fares to rise substantially as existing fuel hedges expire, although higher ticket prices may not fully compensate for the increase in costs. Management is reviewing airport contracts, staffing arrangements and opportunities to use artificial intelligence to improve operational efficiency.

The outlook presents a new challenge for Europe's low-cost aviation market, which has expanded by offering competitive fares and high aircraft utilisation. Rising fuel prices could force airlines to reduce unprofitable routes or pass additional costs to passengers. Ryanair believes travel demand will remain resilient, but the extent of future fare increases will depend on fuel markets, geopolitical conditions and the capacity decisions of competing carriers.